family income

JCT: House tax plan targets rich, but $400K pledge under stress

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On the other hand, the analysis uses a more expansive definition of income than Democrats have used thus far to try to abide by Biden’s $400,000 pledge, which could make the income categories look higher in the JCT tables.

The Ways and Means bill uses taxable income, or income after various deductions and credits. But JCT starts with adjusted gross income, which only excludes certain “above the line” deductions, such as retirement contributions and educator expenses, and then tacks on a much broader array of benefits, like employer contributions for payroll taxes and health insurance.

The analysis also doesn’t consider policies that top Democrats have pledged to include in a final bill that’s signed by the president, such as removing a $10,000 annual cap on state and local tax deductions. The JCT has estimated that more than half of the benefit from repealing the cap would flow to households making more than $1 million, and taxpayers in the $200,000 to $500,000 range could get tax breaks worth a few thousand dollars, on average.

With those caveats in mind, in 2023, taxes would drop for everyone making up to $200,000 but climb by 0.3 percent for those between that income level and $500,000, the JCT said. Households making $1 million or more would see a 10.6 percent rise.

Child tax credit changes

In the middle of the decade, in 2027, that changes. Taxes would still drop for people making less than $30,000 but would tick up by less than 1 percent for people making from $30,000 to $50,000, and then by an amount from 1 percent to 2.6 percent for those making more, up to $1 million, where the rise in taxes would remain above 10 percent.

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